EDI and the Transportation Industry

Medium sized shippers are now moving to EDI and away from tedious data entry just as the large shippers did earlier. Expansion of EDI may mean the next level of automation is needed, while keeping head counts constant. Most dispatch systems now have EDI capabilities so the cost of EDI has fallen.

Carriers will likely be forced by the market into one of two EDI systems: Routine or "Traditional" EDI used by large and/or frequent shippers, or “Web based exchanges” used by small and/or infrequent shippers. The decision on which method to be used will be determined by several factors including: Trading Partner requirements, volume of transactions, and staffing availability. In the event a Carrier utilities the traditional method of EDI, they would eventually need to consider AS2 as the means of communicating their data.

Overview

Routine
Routine high volume communication should be automated. Dispatchers and accounts receivables then have more time to focus on solving problems and customer service. Automation may not include all pieces for every shipper due to their system constraints. For example, some may continue to use the web form to enter load information and require the invoice to be sent by EDI. Non routine tasks such as claims processing are likely to remain manual due to the risk inherent.

Traditional EDI
In Traditional EDI, all data is communicated between the Carrier, Shipper, and the Consignee in electronic documents called “Transaction Sets” (TS). An EDI Translator is used to send and receive these Transaction Sets and to integrate the information into and out of the Dispatch and Billing System. The advantage of this method is that it eliminates a Dispatcher from having to key information into the Dispatch and Billing System. This results in a savings of time and money and eliminates any data entry mistakes.

There are several EDI Transaction Sets that are utilized in the Trucking Industry. The most commonly used Transaction Sets are the:

• 204- Motor Carrier Load Tender
• 990- Response to the Load Tender
• 211- Bill of Lading
• 212- Delivery Trailer Manifest
• 214- Shipment Status Message
• 210- Freight Details and Invoice
• 820- Payment Order/Remittance Advice

A typical flow or exchange of the EDI Transaction Sets would be as follows:

204 - Motor Carrier Load Tender
This transaction set is sent to carriers to offer (tender) a shipment to a full load (truckload) motor carrier including detailed scheduling, equipment requirements, commodities, and shipping instructions pertinent to a load tender. It is not to be used to provide a motor carrier with data relative to a Less-than-Truckload (LTL) bill of lading, pick-up notification, or manifest.

990 - Response to a Load Tender
This transaction set is returned by the shipper as a response to a Motor Carrier Load Tender (204) to accept or reject the Load Tender.

211 - Bill of Lading
This transaction set can be used to allow shippers or other parties, responsible for contracting with a motor carrier, to provide a legal bill of lading for a shipment. It is not to be used to provide a motor carrier with data relative to a load tender, pick-up manifest, or appointment scheduling.

212 - Delivery Trailer Manifest
This transaction set can be used to allow motor carriers to provide consignees or other interested parties with the contents, containing multiple shipments that have been tendered for delivery. It is not to be used to provide the recipient with data relative to a full truckload (TL) shipment.

214 - Shipment Status Message
This transaction set is used by a transportation carrier to provide shippers, consignees, and their agents with the status of shipments in terms of dates, times, locations, route, identifying numbers, and conveyance. It must be able to accommodate multiple stops for an LTL. It is also used to deliver the Detention Message

210 - Motor Carrier Freight Details and Invoice
The transaction set is used to provide detail information for charges for services rendered by a motor carrier. It is used both as a motor carrier invoice to request payment and as details pertaining to motor freight shipment(s) charges.

820 - Payment Order/Remittance Advice
The transaction set is used to make a payment, send a remittance advice, or both. This transaction set can be an order to a financial institution to make a payment to a payee. It can also be a remittance advice identifying the detail needed to perform cash application to the payee's accounts receivable system. The remittance advice can go directly from payer to payee, through a financial institution, or through a third party agent.

Web Based Exchanges
For small shippers or those with infrequent transactions a web based solution might initially make sense. Such a system or method of doing EDI can facilitate the integration of tracking information for shipments into web-enabled programs. It also enables trading partners to visually track a shipment and its expected arrival time. Turnkey solutions such as Global Positioning can also be integrated into web-enabled programs.

Web based exchanges supply both shippers and carriers with up to date tools for doing e-commerce on the web. Business-to-Business web based exchanges provide tools for logistics professionals, such as a tool for load tendering to dedicated carriers and public bidding in auctions for spot market and unfilled loads. Shippers can perform streamline business transactions such as posting loads, reviewing bids and selecting carriers at a competitive price over a web based exchange. Information on pickup, drop off, loading, unloading, HazMat and special care instructions can be provided. Finding the right carrier in the right geographic area, with the right liability insurance and bonding is made easier by using a web based exchange. Carriers can find shipments that meet their needs by using an electronic template to search for shipments based on criteria. Elimination of empty trailer return trips by utilizing the search capabilities of a web based exchange and expansion of customer base could greatly effect the carrier's bottom line.

Some web based exchanges provide an automated freight payment system. This system is an electronic payment system that allows the processing of invoicing and payment without the paperwork. Transactions are done faster and more accurately.

For loads entering the U.S. the submission of manifest information must now be done electronically. The Automated Commercial Environment requirement is now being tested at several border crossings by the U.S. Department of Homeland Security. After testing, implementation nationwide is expected to be swift. ACE requires crew, tractor, trailer, shipper, consignee and shipment information be submitted several hours before the crossing. Failure will cause delays. To implement this process as smoothly as possible DHS requires certification for EDI data format and transmission. As a plus, the manifest information can simultaneously be sent to a consignee, which helps their receiving processes. EDI Transaction Sets 211 and 212 are required.

Conclusion

E-commerce allows carriers to have access to the vital information that help them perform at optimum efficiency. It gives the small carrier the same access and opportunity as the larger carriers. It allows carriers to increase asset utilization, take control of transportation costs, lower the cost of acquiring new business and makes them more competitive. Fast, reliable payments speed collection, eliminate bad debts and improve cash flow. E-commerce also allows shippers the ability to manage their contract carriers in addition to putting loads out for bid in the "public" arena. It allows shippers to find the correct carrier to the specific job and it allows the shipper to find the best price for the service.

The transfer of electronic data in the process of business can be a powerful business tool and this has never been more apparent than in the Trucking Industry. The impact that an e-commerce integration can have on the Trucking Industry, both carrier and shipper can greatly effect the bottom lines of both businesses.

AS2
AS2 is a secure internet communication method that will replace the traditional roles that Value Added Networks (VAN’s) such as Kleinschmidt, Transettlements, Sterling, GXS, and Advantis have played. The Internet Engineering Task Force (IETF) has developed this protocol for transmitting EDI over the Internet (EDI INT). Several Consumer Product Group (CPG) Industry Leaders are now requiring their suppliers to transmit business documents using this method. The benefit is elimination of pricey VAN fees.

The “AS” stands for “Applicability Statement” and uses existing standards in a manner that facilitates ease of use in product development. AS2 utilizes the Hyper Text Transmission Protocol (HTTP) mechanism to transfer packages of data. It is similar to the familiar HTTPS:// but operates in batch mode with appropriate controls and management tools. AS2 is an extremely secure process that uses Certificates and Triple Des Encryption as part of the transmission process.

The AS2 specification supports the transmittal of EDI or any other data over the Internet using HTTP. The specification does not provide a method of validating or processing data. The transported data is received outside the firewall, security checked, moved to the EDI System, and then moved to the appropriate processor based upon its content-type. Rather than sending/receiving data via a VAN, the data would be sent/received via the AS2 transport mechanism and imported/exported into the user’s application system.

The underlying value in implementing AS2 is in eliminating and/or reducing the reoccurring costs of using a VAN. DCS can assist your business in determining which AS2 solution will meet your requirements, and can also assist in installing and testing the product with all Trading Partners.